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InterContinental Sees `Incredible' Long-Term Market in U.K.

(Bloomberg) -- InterContinental Hotels Group Plc sees an “incredible” long-term market in London and the U.K., Chief Executive Officer Keith Barr said, shrugging off the uncertainty fueled by the vote to quit the European Union.

“It’s only 5 percent of our business globally, but it’s where we are based and we think there is more opportunity for us to grow all of our brands in the market,” Keith Barr said in an interview with Bloomberg Television in Dubai on Thursday.

While buying assets in the U.K. isn’t consistent with the group’s strategy, “partnering with key strategic owners is something we’re very focused on,” he said.

The comments come against the backdrop of concerns about the U.K.’s economic outlook after Brexit and whether immigration controls would make it harder to hire workers, particularly in labor-intensive industries sectors like hospitality. Property prices in London had their first drop since 2009 in February. Sales of homes under construction, however, rose in the first quarter.

Barr, who took over from Richard Solomons in June, is focusing on developing the company’s luxury offerings to capture market share following its purchase of Kimpton Hotels & Restaurants in 2014. InterContinental has about 80,000 rooms in its luxury division, which delivered $4 billion in revenues in 2017, plus a further 20,000 rooms in the pipeline.

But the CEO also said he sees rising demand for mid-range hotels especially in countries like Saudi Arabia, where the government is focusing on developing tourism as it tries to diversify away oil.

There are “significant changes taking place in Saudi economically, which will drive domestic tourism and really overall business growth in Saudi; so it’s exciting,” Barr said.

InterContinental, which has about 30,000 hotel rooms in the Middle East compared with 800,000 rooms globally, plans to expand 25 percent in the region within the next 5 years.

Barr said 75 percent of the planned expansion will take place in Saudi Arabia and the United Arab Emirates, where Dubai is gearing up to host Expo 2020. He expected the event to help revive a U.A.E. market currently struggling with supply exceeding demand.